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Keywords

contractdamagesstatutory damages
contractplaintiffdefendantdamagesstatutory damages

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James v. National Financial, LLC, 132 A.3d 799

Facts

Gloria James, a resident of Wilmington, Delaware, took out a $200 loan from National Financial in May 2013, which was structured as a one-year, non-amortizing, unsecured cash advance. The loan required her to make twenty-six bi-weekly interest-only payments of $60, followed by a final payment of $260, totaling $1,820 in repayments. After defaulting on the loan, James sought to rescind it, arguing that the terms were unconscionable and that National violated the Truth in Lending Act.

Defendant National Financial, LLC (“National”) is a consumer finance company that operates under the trade name Loan Till Payday. In May 2013, National loaned $200 to plaintiff Gloria James (the “Disputed Loan”). National described the loan product as a “Flex Pay Loan.” In substance, it was a one-year, non-amortizing, unsecured cash advance.

Issue

Was the loan agreement between Gloria James and National Financial unconscionable, and did National violate the Truth in Lending Act by failing to accurately disclose the APR?

Was the loan agreement between Gloria James and National Financial unconscionable, and did National violate the Truth in Lending Act by failing to accurately disclose the APR?

Rule

A contract may be deemed unconscionable if it is so one-sided that it is oppressive to one party, and the doctrine of unconscionability serves as a limited exception to the law's support for freedom of contract. Additionally, the Truth in Lending Act requires accurate disclosure of APRs.

A contract may be deemed unconscionable if it is so one-sided that it is oppressive to one party, and the doctrine of unconscionability serves as a limited exception to the law's support for freedom of contract.

Analysis

The court found that the terms of the loan were excessively burdensome and that the APR of 838.45% was unconscionable, particularly given James' financial situation and lack of sophistication. The lender's failure to provide a clear and accurate representation of the loan terms, including the APR, further supported the finding of unconscionability and the violation of the Truth in Lending Act.

The court found that the terms of the loan were excessively burdensome and that the APR of 838.45% was unconscionable, particularly given James' financial situation and lack of sophistication.

Conclusion

The court rescinded the loan agreement due to its unconscionable nature and awarded statutory damages to James for the violations of the Truth in Lending Act.

The court rescinded the loan agreement due to its unconscionable nature and awarded statutory damages to James for the violations of the Truth in Lending Act.

Who won?

Gloria James prevailed in the case because the court found the loan terms to be unconscionable and ruled that National Financial violated the Truth in Lending Act.

Judgment for borrower.

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